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Sandy Spring Bancorp Reports Net Income of $10.6 Million for the Second Quarter

OLNEY, Md., July 21, 2016 (GLOBE NEWSWIRE) -- Sandy Spring Bancorp, Inc., (Nasdaq:SASR) the parent company of Sandy Spring Bank, today reported net income for the second quarter of 2016 of $10.6 million ($0.44 per diluted share) compared to net income of $10.3 million ($0.42 per diluted share) for the second quarter of 2015 and net income of $10.8 million ($0.45 per diluted share) for the first quarter of 2016.

For the six months ended June 30, 2016, net income was $21.5 million ($0.89 per diluted share) compared to net income of $21.6 million ($0.87 per diluted share) for the first six months of 2015.

“During the second quarter, pre-tax, pre-provision income climbed to its highest level since the third quarter of 2013, a quarter which included the effect of significant loan related recoveries. This quarter’s pre-tax, pre-provision income was driven by significant loan and deposit growth. This growth enabled us to shift assets from the investment portfolio to higher yielding loans during the quarter,” said Dan Schrider, President and Chief Executive Officer.

“These core activities coupled with the restructuring of borrowings with lower rates and a reduced reliance on borrowed funds during the quarter should make a positive contribution to our prospective earnings run rate,” said Schrider.

Second Quarter Highlights:

  • Pre-tax, pre-provision income increased 11% compared with the second quarter of 2015 and 8% compared to the first quarter of 2016.
  • Total loans increased 12% compared to the second quarter of 2015 and 3% compared to the first quarter of 2016. Commercial loans increased 15% and residential loans increased 9% over the prior year.
  • Total deposits grew 8% from the prior year and 3% from the prior quarter.
  • The net interest margin was 3.51% for the second quarter of 2016, compared to 3.42% for the second quarter of 2015 and 3.44% for the first quarter of 2016.
  • During the second quarter, the Company prepaid $35 million in FHLB advances and extinguished $5 million in subordinated debentures. These transactions were essentially neutral with respect to net income for the quarter; however, they will have a positive impact on future interest expense.

Review of Balance Sheet and Credit Quality

Total assets grew 5% to $4.7 billion at June 30, 2016 compared to $4.5 billion at June 30, 2015. This growth was driven by a 12% increase in the loan portfolio as total loans ended the period at $3.7 billion.

At June 30, 2016, combined noninterest-bearing and interest-bearing checking account balances, an important performance driver of multiple-product banking relationships with clients, increased 8% compared to balances at June 30, 2015. Total deposits and certain other short-term borrowings that comprise the funding sources derived from customers, increased 8% compared to June 30, 2015.

Tangible common equity totaled $439 million at June 30, 2016 compared to $435 million at June 30, 2015. The ratio of tangible common equity to tangible assets decreased to 9.44% at June 30, 2016 from 9.84% at June 30, 2015 due primarily to the growth in assets and share repurchases over the preceding 12 months. Dividends per common share were $0.48 per share for the first six months of 2016 compared to $0.44 per common share for the first six months of 2015, a 9% increase. At June 30, 2016, the Company had a total risk-based capital ratio of 13.57%, a common equity tier 1 risk-based capital ratio of 11.63%, a tier 1 risk-based capital ratio of 12.42% and a tier 1 leverage ratio of 10.29%.

Non-performing loans totaled $31.4 million at June 30, 2016 compared to $37.3 million at June 30, 2015 and $34.5 million at December 31, 2015. The level of non-performing loans to total loans decreased to 0.85% at June 30, 2016 compared to 1.13% at June 30, 2015 primarily due to the growth in the overall loan portfolio.

Loan charge-offs, net of recoveries, totaled $1.3 million for the second quarter of 2016 compared to negligible net recoveries for the second quarter of 2015 and $0.4 million in charge-offs for the first quarter of 2016. The allowance for loan and lease losses represented 1.18% of outstanding loans and leases and 138% of non-performing loans at June 30, 2016 compared to 1.18% of outstanding loans and leases and 104% of non-performing loans at June 30, 2015. Non-performing loans includes accruing loans 90 days or more past due and restructured loans.

Income Statement Review

Net interest income for the second quarter of 2016 increased 8% compared to the second quarter of 2015. The net interest margin was 3.51% for the second quarter of 2016 compared to 3.42% for the second quarter of 2015 due primarily to a combination of loan growth and the previously mentioned prepayment of FHLB advances and subordinated debentures.

The provision for loan and lease losses was $3.0 million for the second quarter of 2016 compared to a charge of $1.2 million for the second quarter of 2015 and $1.2 million for the first quarter of 2016. The increase in the current quarter’s charge versus the prior year’s quarter reflects the growth in the loan portfolio.

Non-interest income increased to $12.8 million for the second quarter of 2016 compared to $12.1 million for the second quarter of 2015. The increase in non-interest income for the quarter compared to the prior year quarter was due primarily to a $1.2 million gain on the extinguishment of $5 million in subordinated debentures. Excluding this transaction, non-interest income decreased 5% as income from wealth management decreased due to the sale of a portion of the assets under management which occurred in the first quarter of 2016.

Non-interest expenses increased 5% to $30.9 million for the second quarter of 2016 compared to $29.5 million in the second quarter of 2015. This increase was driven by the prepayment penalties of $1.4 million for the early payoff of $35 million in high-rate FHLB advances during the second quarter. Excluding the prepayment penalties, non-interest expenses remained level compared to the prior year quarter. The non-GAAP efficiency ratio was 59.12% for the second quarter of 2016 compared to 61.35% for the second quarter of 2015.

Net interest income for the first six months of 2016 increased 8% compared to the first six months of 2015 due primarily to an increase in average loans, which was funded, in part, by a decrease in lower-yielding investment securities. As a result, net interest margin was 3.47% for the first six months of 2016 compared to 3.43% for the first six months of 2015.

The provision for loan and lease losses was a charge of $4.2 million for the first six months of 2016 compared to a charge of $1.8 million for the first six months of 2015 reflecting the growth in the loan portfolio over the prior year period.

Non-interest income increased 3% to $26.1 million for the first six months of 2016 compared to $25.3 million for the first six months of 2015. This increase was driven by $1.9 million in gains on securities sales and the extinguishment of subordinated debentures discussed previously. Excluding these transactions, non-interest income decreased 9% due to a decrease in income from wealth management resulting from the sale of a portion of the assets under management and a decrease in income from mortgage banking as mortgage sales volumes declined.

Non-interest expenses increased 8% to $63.2 million for the first six months of 2016 compared to $58.7 million for the first six months of 2015. This increase was due largely to prepayment penalties of $3.2 million for the early payoff of $75 million in high-rate FHLB advances. Excluding the prepayment penalties, non-interest expenses increased 2% over the prior year period. The current year-to-date period included increases in salaries and benefits and equipment expenses. The non-GAAP efficiency ratio was 60.47% for the first six months of 2016 compared to 60.75% for the first six months of 2015.

Conference Call

The Company’s management will host a conference call to discuss its second quarter results today at 2:00 P.M. (ET). A live Web cast of the conference call is available through the Investor Relations’ section of the Sandy Spring Web site at www.sandyspringbank.com. Participants may call 1-866-235-9910. A password is not necessary. Visitors to the Web site are advised to log on 10 minutes ahead of the scheduled start of the call. An internet-based replay will be available at the Web site until 9:00 am (ET) August 4, 2016. A replay of the teleconference will be available through the same time period by calling 1-877-344-7529 under conference call number 10088183.

About Sandy Spring Bancorp, Inc.

Sandy Spring Bancorp, Inc., headquartered in Olney, Maryland, is the holding company for Sandy Spring Bank. Independent and community-oriented, Sandy Spring Bank offers a broad range of commercial banking, retail banking, mortgage and trust services throughout central Maryland, Northern Virginia, and the greater Washington, D.C. market. Through its subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc., Sandy Spring Bank also offers a comprehensive menu of insurance and wealth management services. With $4.7 billion in assets, the bank operates 45 community offices and six financial centers across the region. Visit www.sandyspringbank.com for more information.

Forward-Looking Statements

Sandy Spring Bancorp makes forward-looking statements in this news release and in the conference call regarding this news release. These forward-looking statements may include: statements of goals, intentions, earnings expectations, and other expectations; estimates of risks and of future costs and benefits; assessments of probable loan and lease losses; assessments of market risk; and statements of the ability to achieve financial and other goals.

Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project” and other similar words and expressions. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made. Sandy Spring Bancorp does not assume any duty and does not undertake to update its forward-looking statements. Because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those that Sandy Spring Bancorp anticipated in its forward-looking statements and future results could differ materially from historical performance.

Sandy Spring Bancorp’s forward-looking statements are subject to the following principal risks and uncertainties: general economic conditions and trends, either nationally or locally; conditions in the securities markets; changes in interest rates; changes in deposit flows, and in the demand for deposit, loan, and investment products and other financial services; changes in real estate values; changes in the quality or composition of the Company’s loan or investment portfolios; changes in competitive pressures among financial institutions or from non-financial institutions; the Company’s ability to retain key members of management; changes in legislation, regulations, and policies; and a variety of other matters which, by their nature, are subject to significant uncertainties. Sandy Spring Bancorp provides greater detail regarding some of these factors in its Form 10-K for the year ended December 31, 2015, including in the Risk Factors section of that report, and in its other SEC reports. Sandy Spring Bancorp’s forward-looking statements may also be subject to other risks and uncertainties, including those that it may discuss elsewhere in this news release or in its filings with the SEC, accessible on the SEC’s Web site at www.sec.gov.

Sandy Spring Bancorp, Inc. and Subsidiaries
FINANCIAL HIGHLIGHTS - UNAUDITED
Three Months Ended Six Months Ended
June 30, % June 30, %
(Dollars in thousands, except per share data) 2016 2015 Change 2016 2015 Change
Results of Operations:
Net interest income $ 36,732 $33,933 8 %$ 72,854 $67,306 8 %
Provision for loan and lease losses 2,957 1,218 143 4,193 1,815 131
Non-interest income 12,751 12,109 5 26,114 25,268 3
Non-interest expenses 30,871 29,477 5 63,188 58,721 8
Income before income taxes 15,655 15,347 2 31,587 32,038 (1)
Net income 10,647 10,333 3 21,460 21,558 -
Pre-tax pre-provision income $ 18,612 $16,727 11 $ 35,780 $34,215 5
Return on average assets 0.92 % 0.93 % 0.92 % 0.99 %
Return on average common equity 8.21 % 8.02 % 8.25 % 8.37 %
Net interest margin 3.51 % 3.42 % 3.47 % 3.43 %
Efficiency ratio - GAAP basis (1) 62.39 % 64.02 % 63.85 % 63.43 %
Efficiency ratio - Non-GAAP basis (1) 59.12 % 61.35 % 60.47 % 60.75 %
Per share data:
Basic net income $ 0.45 $0.42 7 %$ 0.90 $0.87 3 %
Diluted net income $ 0.44 $0.42 5 $ 0.89 $0.87 2
Average fully diluted shares 24,108,668 24,689,762 (2) 24,165,675 24,867,988 (3)
Dividends declared per share $ 0.24 $0.22 9 $ 0.48 $0.44 9
Book value per share 22.18 21.12 5 22.18 21.12 5
Tangible book value per share 18.40 17.71 4 18.40 17.71 4
Outstanding shares 23,874,650 24,562,471 (3) 23,874,650 24,562,471 (3)
Financial Condition at period-end:
Investment securities $ 734,828 $878,284 (16)%$ 734,828 $878,284 (16)%
Loans and leases 3,672,624 3,288,865 12 3,672,624 3,288,865 12
Interest-earning assets 4,461,180 4,222,667 6 4,461,180 4,222,667 6
Assets 4,739,449 4,507,367 5 4,739,449 4,507,367 5
Deposits 3,510,141 3,247,346 8 3,510,141 3,247,346 8
Interest-bearing liabilities 2,996,893 2,851,750 5 2,996,893 2,851,750 5
Stockholders' equity 529,479 518,873 2 529,479 518,873 2
Capital ratios:
Tier 1 leverage (4) 10.29 % 10.83 % 10.29 % 10.83 %
Tier 1 capital to risk-weighted assets (4) 12.42 % 13.54 % 12.42 % 13.54 %
Total regulatory capital to risk-weighted assets (4) 13.57 % 14.65 % 13.57 % 14.65 %
Common equity tier 1 capital to risk-weighted assets (4) 11.63 % 12.53 % 11.63 % 12.53 %
Tangible common equity to tangible assets (2) 9.44 % 9.84 % 9.44 % 9.84 %
Average equity to average assets 11.18 % 11.65 % 11.18 % 11.78 %
Credit quality ratios:
Allowance for loan and lease losses to loans and leases 1.18 % 1.18 % 1.18 % 1.18 %
Non-performing loans to total loans 0.85 % 1.13 % 0.85 % 1.13 %
Non-performing assets to total assets 0.69 % 0.93 % 0.69 % 0.93 %
Allowance for loan and lease losses to non-performing loans 138.36 % 103.71 % 138.36 % 103.71 %
Annualized net charge-offs to average loans and leases (3) 0.15 % - % 0.10 % 0.06 %
(1) The efficiency ratio - GAAP basis is non-interest expenses divided by net interest income plus non-interest income from the Condensed Consolidated Statements of Income.
The traditional efficiency ratio - Non-GAAP basis excludes intangible asset amortization from non-interest expense; securities gains (losses) from non-interest income; OTTI;
and the tax-equivalent adjustment to net interest income. See the Reconciliation Table included with these Financial Highlights.
(2) The tangible common equity to tangible assets ratio is a non-GAAP ratio that divides assets excluding intangible assets into stockholders' equity after deducting intangible assets
and other comprehensive gains (losses). See the Reconciliation Table included with these Financial Highlights.
(3) Calculation utilizes average loans and leases, excluding residential mortgage loans held-for-sale.
(4) Estimated ratio at June 30, 2016

Sandy Spring Bancorp, Inc. and Subsidiaries
RECONCILIATION TABLE - UNAUDITED
Three Months Ended Six Months Ended
June 30, June 30,
(Dollars in thousands) 2016 2015 2016 2015
Pre-tax pre-provision income:
Net income $ 10,647 $10,333 $ 21,460 $21,558
Plus non-GAAP adjustment:
Litigation expenses - 162 - 362
Income taxes 5,008 5,014 10,127 10,480
Provision (credit) for loan and lease losses 2,957 1,218 4,193 1,815
Pre-tax pre-provision income $ 18,612 $16,727 $ 35,780 $34,215
Efficiency ratio - GAAP basis:
Non-interest expenses $ 30,871 $29,477 $ 63,188 $58,721
Net interest income plus non-interest income $ 49,483 $46,042 $ 98,968 $92,574
Efficiency ratio - GAAP basis 62.39% 64.02% 63.85% 63.43%
Efficiency ratio - Non-GAAP basis:
Non-interest expenses $ 30,871 $29,477 $ 63,188 $58,721
Less non-GAAP adjustment:
Amortization of intangible assets 28 106 60 213
Loss on FHLB Redemption 1,416 3,167
Litigation expenses - 162 - 362
Non-interest expenses - as adjusted $ 29,427 $29,209 $ 59,961 $58,146
Net interest income plus non-interest income $ 49,483 $46,042 $ 98,968 $92,574
Plus non-GAAP adjustment:
Tax-equivalent income 1,640 1,589 3,304 3,153
Less non-GAAP adjustments:
Securities gains 150 19 1,919 19
Gain on redemption of subordinated debentures 1,200 - 1,200 -
Net interest income plus non-interest income - as adjusted $ 49,773 $47,612 $ 99,153 $95,708
Efficiency ratio - Non-GAAP basis 59.12% 61.35% 60.47% 60.75%
Tangible common equity ratio:
Total stockholders' equity $ 529,479 $518,873 $ 529,479 $518,873
Accumulated other comprehensive income (5,886) 592 (5,886) 592
Goodwill (84,171) (84,171) (84,171) (84,171)
Other intangible assets, net (77) (296) (77) (296)
Tangible common equity $ 439,345 $434,998 $ 439,345 $434,998
Total assets $ 4,739,449 $4,507,367 $ 4,739,449 $4,507,367
Goodwill (84,171) (84,171) (84,171) (84,171)
Other intangible assets, net (77) (296) (77) (296)
Tangible assets $ 4,655,201 $4,422,900 $ 4,655,201 $4,422,900
Tangible common equity ratio 9.44% 9.84% 9.44% 9.84%
Outstanding common shares 23,874,650 24,562,471 23,874,650 24,562,471
Tangible book value per common share $ 18.40 $17.71 $ 18.40 $17.71

Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED
June 30, December 31, June 30,
(Dollars in thousands) 2016 2015 2015
Assets
Cash and due from banks $ 53,334 $46,956 $53,569
Federal funds sold 832 472 472
Interest-bearing deposits with banks 39,406 25,454 35,601
Cash and cash equivalents 93,572 72,882 89,642
Residential mortgage loans held for sale (at fair value) 13,490 15,457 19,445
Investments available-for-sale (at fair value) 700,486 592,049 625,819
Investments held-to-maturity -- fair value of $211,704 and $217,880 at December 31, 2015
and June 30, 2015, respectively - 208,265 216,866
Other equity securities 34,342 41,336 35,599
Total loans and leases 3,672,624 3,495,370 3,288,865
Less: allowance for loan and lease losses (43,384) (40,895) (38,713)
Net loans and leases 3,629,240 3,454,475 3,250,152
Premises and equipment, net 53,055 53,214 51,609
Other real estate owned 1,311 2,742 4,514
Accrued interest receivable 13,399 13,443 13,144
Goodwill 84,171 84,171 84,171
Other intangible assets, net 77 138 296
Other assets 116,306 117,208 116,110
Total assets $ 4,739,449 $4,655,380 $4,507,367
Liabilities
Noninterest-bearing deposits $ 1,176,135 $1,001,841 $1,092,413
Interest-bearing deposits 2,334,006 2,261,889 2,154,933
Total deposits 3,510,141 3,263,730 3,247,346
Securities sold under retail repurchase agreements and federal funds purchased 117,887 109,145 111,817
Advances from FHLB 515,000 685,000 550,000
Subordinated debentures 30,000 35,000 35,000
Accrued interest payable and other liabilities 36,942 38,078 44,331
Total liabilities 4,209,970 4,130,953 3,988,494
Stockholders' Equity
Common stock -- par value $1.00; shares authorized 50,000,000; shares issued and outstanding 23,874,650,
24,295,971 and 24,562,471 at June 30, 2016, December 31, 2015 and June 30, 2015, respectively 23,875 24,296 24,562
Additional paid in capital 164,040 175,588 181,504
Retained earnings 335,678 325,840 313,399
Accumulated other comprehensive income (loss) 5,886 (1,297) (592)
Total stockholders' equity 529,479 524,427 518,873
Total liabilities and stockholders' equity $ 4,739,449 $4,655,380 $4,507,367


Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
Three Months Ended Six Months Ended
June 30,June 30,
(Dollars in thousands, except per share data) 2016 2015 2016 2015
Interest Income:
Interest and fees on loans and leases $ 36,928 $33,031 $ 73,134 $65,170
Interest on loans held for sale 64 132 198 208
Interest on deposits with banks 54 22 107 44
Interest and dividends on investment securities:
Taxable 2,840 3,850 6,126 7,427
Exempt from federal income taxes 1,916 1,814 3,889 4,072
Interest on federal funds sold 1 - 2 -
Total interest income 41,803 38,849 83,456 76,921
Interest Expense:
Interest on deposits 2,041 1,367 3,878 2,561
Interest on retail repurchase agreements and federal funds purchased 72 60 138 110
Interest on advances from FHLB 2,739 3,266 6,113 6,502
Interest on subordinated debt 219 223 473 442
Total interest expense 5,071 4,916 10,602 9,615
Net interest income 36,732 33,933 72,854 67,306
Provision for loan and lease losses 2,957 1,218 4,193 1,815
Net interest income after provision for loan and lease losses 33,775 32,715 68,661 65,491
Non-interest Income:
Investment securities gains 150 19 1,919 19
Service charges on deposit accounts 1,956 1,839 3,859 3,721
Mortgage banking activities 1,106 822 1,641 2,000
Wealth management income 4,448 5,161 8,853 10,077
Insurance agency commissions 949 881 2,394 2,499
Income from bank owned life insurance 615 606 1,230 1,319
Bank card fees 1,220 1,220 2,309 2,277
Other income 2,307 1,561 3,909 3,356
Total non-interest income 12,751 12,109 26,114 25,268
Non-interest Expenses:
Salaries and employee benefits 17,221 17,534 35,451 34,833
Occupancy expense of premises 3,162 3,173 6,635 6,662
Equipment expenses 1,693 1,490 3,357 2,863
Marketing 662 942 1,343 1,473
Outside data services 1,355 1,102 2,718 2,363
FDIC insurance 649 654 1,286 1,285
Amortization of intangible assets 28 106 60 213
Litigation expenses - 162 - 362
Other expenses 6,101 4,314 12,338 8,667
Total non-interest expenses 30,871 29,477 63,188 58,721
Income before income taxes 15,655 15,347 31,587 32,038
Income tax expense 5,008 5,014 10,127 10,480
Net income $ 10,647 $10,333 $ 21,460 $21,558
Net Income Per Share Amounts:
Basic net income per share $ 0.45 $0.42 $ 0.90 $0.87
Diluted net income per share $ 0.44 $0.42 $ 0.89 $0.87
Dividends declared per share $ 0.24 $0.22 $ 0.48 $0.44


Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
2016 2015
(Dollars in thousands, except per share data) Q2Q1 Q4Q3Q2Q1
Profitability for the Quarter:
Tax-equivalent interest income $ 43,443 $43,317 $42,736 $41,980 $40,438 $39,343
Interest expense 5,071 5,531 5,297 5,201 4,916 4,699
Tax-equivalent net interest income 38,372 37,786 37,439 36,779 35,522 34,644
Tax-equivalent adjustment 1,640 1,664 1,662 1,663 1,589 1,271
Provision for loan and lease losses 2,957 1,236 1,850 1,706 1,218 597
Non-interest income 12,751 13,363 12,243 12,390 12,109 13,159
Non-interest expenses 30,871 32,317 26,996 29,630 29,477 29,244
Income before income taxes 15,655 15,932 19,174 16,170 15,347 16,691
Income tax expense 5,008 5,119 6,372 5,175 5,014 5,466
Net income $ 10,647 $10,813 $12,802 $10,995 $10,333 $11,225
Financial Performance:
Pre-tax pre-provision income $ 18,612 $17,168 $16,638 $18,031 $16,727 $17,488
Return on average assets 0.92% 0.93% 1.11% 0.96% 0.93% 1.04%
Return on average common equity 8.21% 8.29% 9.73% 8.41% 8.02% 8.73%
Net interest margin 3.51% 3.44% 3.45% 3.43% 3.42% 3.44%
Efficiency ratio - GAAP basis (1) 62.39% 65.31% 56.22% 62.37% 64.02% 62.85%
Efficiency ratio - Non-GAAP basis (1) 59.12% 61.84% 63.08% 59.73% 61.35% 60.53%
Per Share Data:
Basic net income per share $ 0.45 $0.45 $0.53 $0.45 $0.42 $0.45
Diluted net income per share $ 0.44 $0.45 $0.52 $0.45 $0.42 $0.45
Average fully diluted shares 24,108,668 24,222,940 24,455,847 24,602,817 24,689,762 25,048,576
Dividends declared per common share $ 0.24 $0.24 $0.24 $0.22 $0.22 $0.22
Non-interest Income:
Securities gains $ 150 $1,769 $16 $1 $19 $-
Service charges on deposit accounts 1,956 1,903 1,950 1,936 1,839 1,882
Mortgage banking activities 1,106 535 548 566 822 1,178
Wealth management income 4,448 4,405 4,891 4,963 5,161 4,916
Insurance agency commissions 949 1,445 1,029 1,648 881 1,618
Income from bank owned life insurance 615 615 634 618 606 713
Bank card fees 1,220 1,089 1,177 1,198 1,220 1,057
Other income 2,307 1,602 1,998 1,460 1,561 1,795
Total Non-interest Income $ 12,751 $13,363 $12,243 $12,390 $12,109 $13,159
Non-interest Expense:
Salaries and employee benefits $ 17,221 $18,230 $18,437 $17,733 $17,534 $17,299
Occupancy expense of premises 3,162 3,473 3,061 3,086 3,173 3,489
Equipment expenses 1,693 1,664 1,608 1,600 1,490 1,373
Marketing 662 681 735 688 942 531
Outside data services 1,355 1,363 1,331 1,329 1,102 1,261
FDIC insurance 649 637 641 565 654 631
Amortization of intangible assets 28 32 52 107 106 107
Litigation expenses - - (4,386) 155 162 200
Professional fees 1,447 1,138 1,322 1,089 1,199 1,209
Other real estate owned expenses (5) 17 14 48 4 10
Other expenses 4,659 5,082 4,181 3,230 3,111 3,134
Total Non-interest Expense $ 30,871 $32,317 $26,996 $29,630 $29,477 $29,244
(1) The efficiency ratio - GAAP basis is non-interest expenses divided by net interest income plus non-interest income from the Condensed Consolidated Statements of
Income. The traditional, efficiency ratio - non-GAAP basis excludes intangible asset amortization from non-interest expense; excludes securities gains;
OTTI losses from non-interest income; and adds the tax-equivalent adjustment to net interest income. See the Reconciliation Table included with these
Financial Highlights.


Sandy Spring Bancorp, Inc. and Subsidiaries
HISTORICAL TRENDS - QUARTERLY FINANCIAL DATA - UNAUDITED
2016 2015
(Dollars in thousands) Q2Q1 Q4Q3Q2Q1
Balance Sheets at Quarter End:
Residential mortgage loans $ 820,618 $804,105 $796,358 $773,889 $744,195 $728,858
Residential construction loans 142,710 138,221 129,281 139,492 137,134 130,321
Commercial ADC loans 285,585 261,204 255,980 239,160 223,103 203,731
Commercial investor real estate loans 824,252 783,161 719,084 710,694 694,179 668,931
Commercial owner occupied real estate loans 700,599 675,560 678,027 680,601 643,973 618,846
Commercial business loans 451,711 451,239 465,765 423,855 409,795 385,452
Leasing - - - 19 21 36
Consumer loans 447,149 447,198 450,875 444,729 436,465 428,531
Total loans and leases 3,672,624 3,560,688 3,495,370 3,412,439 3,288,865 3,164,706
Allowance for loan and lease losses (43,384) (41,766) (40,895) (39,661) (38,713) (37,475)
Loans held for sale 13,490 27,806 15,457 10,418 19,445 13,899
Investment securities 734,828 742,401 841,650 862,409 878,284 912,565
Interest-earning assets 4,461,180 4,447,063 4,378,403 4,339,375 4,222,667 4,125,549
Total assets 4,739,449 4,716,608 4,655,380 4,611,034 4,507,367 4,401,380
Noninterest-bearing demand deposits 1,176,135 1,084,746 1,001,841 1,068,299 1,092,413 1,017,566
Total deposits 3,510,141 3,412,308 3,263,730 3,275,668 3,247,346 3,109,892
Customer repurchase agreements 117,887 121,043 109,145 121,378 111,817 101,640
Total interest-bearing liabilities 2,996,893 3,073,605 3,091,034 2,973,747 2,851,750 2,818,966
Total stockholders' equity 529,479 522,392 524,427 523,594 518,873 521,768
Quarterly Average Balance Sheets:
Residential mortgage loans $ 811,705 $807,443 $781,015 $754,007 $734,382 $724,248
Residential construction loans 142,854 134,708 133,812 134,448 137,216 132,456
Commercial ADC loans 272,090 261,687 247,612 227,545 218,341 206,105
Commercial investor real estate loans 788,785 750,821 717,742 704,068 668,883 645,163
Commercial owner occupied real estate loans 684,907 677,786 673,883 656,337 624,407 611,722
Commercial business loans 453,459 460,903 424,510 413,300 398,510 383,111
Leasing - - 17 19 28 44
Consumer loans 449,594 451,075 448,439 441,740 434,011 425,434
Total loans and leases 3,603,394 3,544,423 3,427,030 3,331,464 3,215,778 3,128,283
Loans held for sale 8,326 14,036 11,951 21,070 14,075 7,053
Investment securities 739,132 810,593 840,276 869,461 898,237 925,683
Interest-earning assets 4,394,879 4,411,796 4,320,674 4,261,939 4,162,963 4,097,648
Total assets 4,664,343 4,685,747 4,594,025 4,537,142 4,438,670 4,372,988
Noninterest-bearing demand deposits 1,082,762 1,021,471 1,058,215 1,063,500 1,023,042 986,688
Total deposits 3,429,897 3,300,131 3,285,299 3,263,993 3,128,562 3,056,186
Customer repurchase agreements 122,597 110,862 125,275 121,127 106,179 90,020
Total interest-bearing liabilities 3,020,505 3,103,710 2,968,555 2,906,348 2,852,414 2,817,575
Total stockholders' equity 521,387 524,309 521,786 518,619 516,940 521,346
Financial Measures:
Average equity to average assets 11.18% 11.19% 11.36% 11.43% 11.65% 11.92%
Investment securities to earning assets 16.47% 16.69% 19.22% 19.87% 20.80% 22.12%
Loans to earning assets 82.32% 80.07% 79.83% 78.64% 77.89% 76.71%
Loans to assets 77.49% 75.49% 75.08% 74.01% 72.97% 71.90%
Loans to deposits 104.63% 104.35% 107.10% 104.18% 101.28% 101.76%
Capital Measures:
Tier 1 leverage (1) 10.29% 10.23% 10.60% 10.65% 10.83% 11.00%
Tier 1 capital to risk-weighted assets (1) 12.42% 12.74% 13.13% 13.17% 13.54% 14.03%
Total regulatory capital to risk-weighted assets (1) 13.57% 13.86% 14.25% 14.27% 14.65% 15.14%
Common equity tier 1 capital to risk-weighted assets (1) 11.63% 11.79% 12.17% 12.20% 12.53% 12.99%
Book value per share $ 22.18 $21.92 $21.58 $21.44 $21.12 $21.10
Outstanding shares 23,874,650 23,827,305 24,295,971 24,424,944 24,562,471 24,733,868
(1) Estimated ratio at June 30, 2016


Sandy Spring Bancorp, Inc. and Subsidiaries
LOAN PORTFOLIO QUALITY DETAIL - UNAUDITED
2016 2015
(Dollars in thousands) June 30, March 31, December 31, September 30, June 30, March 31,
Non-Performing Assets:
Loans and leases 90 days past due:
Commercial business $ - $- $- $- $- $-
Commercial real estate:
Commercial AD&C - - - - - -
Commercial investor real estate - - - - - -
Commercial owner occupied real estate - - - - - -
Leasing - - - 1 2 -
Consumer 2 1 - - 7 -
Residential real estate:
Residential mortgage - - - - - -
Residential construction - - - - - -
Total loans and leases 90 days past due 2 1 - 1 9 -
Non-accrual loans and leases:
Commercial business 4,263 3,741 3,696 3,881 3,285 4,166
Commercial real estate:
Commercial AD&C 137 147 194 194 194 1,363
Commercial investor real estate 8,868 7,885 8,368 8,609 10,023 10,083
Commercial owner occupied real estate 5,678 7,149 6,340 7,932 8,423 8,974
Leasing - - - - - -
Consumer 2,600 2,715 2,193 1,621 1,214 1,962
Residential real estate:
Residential mortgage 6,186 9,329 8,822 7,488 7,780 3,235
Residential construction 202 412 418 770 780 788
Total non-accrual loans and leases 27,934 31,378 30,031 30,495 31,699 30,571
Total restructured loans - accruing 3,420 4,716 4,467 6,419 5,620 5,446
Total non-performing loans and leases 31,356 36,095 34,498 36,915 37,328 36,017
Other assets and real estate owned (OREO) 1,311 2,414 2,742 2,619 4,514 3,227
Total non-performing assets $ 32,667 $38,509 $37,240 $39,534 $41,842 $39,244
For the quarter ended,
June 30, March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands) 2016 2016 2015 2015 2015 2015
Analysis of Non-accrual Loan and Lease Activity:
Balance at beginning of period $ 31,378 $30,031 $30,495 $31,699 $30,571 $28,530
Non-accrual balances transferred to OREO - - (423) (180) (1,309) (32)
Non-accrual balances charged-off (1,305) (274) (869) (752) (549) (1,077)
Net payments or draws (4,810) (914) (3,084) (1,846) (2,970) (1,067)
Loans placed on non-accrual 2,671 2,535 3,912 1,574 5,956 4,217
Non-accrual loans brought current - - - - - -
Balance at end of period $ 27,934 $31,378 $30,031 $30,495 $31,699 $30,571
Analysis of Allowance for Loan Losses:
Balance at beginning of period $ 41,766 $40,895 $39,661 $38,713 $37,475 $37,802
Provision for loan and lease losses 2,957 1,236 1,850 1,706 1,218 597
Less loans charged-off, net of recoveries:
Commercial business 106 67 (128) (25) 73 (89)
Commercial real estate:
Commercial AD&C - 48 - - (547) 706
Commercial investor real estate (107) 192 (4) (5) 85 (5)
Commercial owner occupied real estate (1) (3) 725 104 (1) 212
Leasing - - 4 - - -
Consumer 364 54 (31) 348 395 43
Residential real estate:
Residential mortgage 989 15 80 342 (18) 65
Residential construction (12) (8) (30) (6) (7) (8)
Net charge-offs 1,339 365 616 758 (20) 924
Balance at end of period $ 43,384 $41,766 $40,895 $39,661 $38,713 $37,475
Asset Quality Ratios:
Non-performing loans to total loans 0.85% 1.01% 0.99% 1.08% 1.13% 1.14%
Non-performing assets to total assets 0.69% 0.82% 0.80% 0.86% 0.93% 0.89%
Allowance for loan losses to loans 1.18% 1.17% 1.17% 1.16% 1.18% 1.18%
Allowance for loan losses to non-performing loans 138.36% 115.72% 118.54% 107.44% 103.71% 104.05%
Annualized net charge-offs to average loans 0.15% 0.04% 0.07% 0.09% 0.00% 0.12%


Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED
Three Months Ended June 30,
2016 2015
Annualized Annualized
Average (1) Average Average (1) Average
(Dollars in thousands and tax-equivalent) Balances Interest Yield/Rate Balances Interest Yield/Rate
Assets
Residential mortgage loans $ 811,705 $ 6,934 3.42% $734,382 $ 6,155 3.35%
Residential construction loans 142,854 1,268 3.57 137,216 1,268 3.71
Total mortgage loans 954,559 8,202 3.44 871,598 7,423 3.41
Commercial ADC loans 272,090 3,115 4.60 218,341 2,525 4.64
Commercial investor real estate loans 788,785 8,988 4.58 668,883 7,771 4.66
Commercial owner occupied real estate loans 684,907 8,280 4.86 624,407 7,669 4.93
Commercial business loans 453,459 4,943 4.38 398,510 4,369 4.40
Leasing - - - 28 - 1.49
Total commercial loans and leases 2,199,241 25,326 4.63 1,910,169 22,334 4.69
Consumer loans 449,594 3,885 3.50 434,011 3,606 3.35
Total loans and leases (2) 3,603,394 37,413 4.17 3,215,778 33,363 4.16
Loans held for sale 8,326 64 3.08 14,075 132 3.76
Taxable securities 456,803 2,943 2.58 606,581 3,786 2.50
Tax-exempt securities (3) 282,329 2,968 4.21 291,656 3,135 4.30
Total investment securities 739,132 5,911 3.20 898,237 6,921 3.08
Interest-bearing deposits with banks 43,300 54 0.50 34,400 22 0.25
Federal funds sold 727 1 0.49 473 - 0.22
Total interest-earning assets 4,394,879 43,443 3.97 4,162,963 40,438 3.89
Less: allowance for loan and lease losses (42,064) (38,217)
Cash and due from banks 46,527 46,894
Premises and equipment, net 53,218 51,591
Other assets 211,783 215,439
Total assets $ 4,664,343 $4,438,670
Liabilities and Stockholders' Equity
Interest-bearing demand deposits $ 586,323 115 0.08%$527,307 101 0.08%
Regular savings deposits 298,435 47 0.06 278,199 37 0.05
Money market savings deposits 907,670 495 0.22 833,382 317 0.15
Time deposits 554,707 1,384 1.00 466,632 912 0.78
Total interest-bearing deposits 2,347,135 2,041 0.35 2,105,520 1,367 0.26
Other borrowings 122,601 72 0.24 106,180 60 0.23
Advances from FHLB 519,780 2,739 2.12 605,714 3,266 2.16
Subordinated debentures 30,989 219 2.83 35,000 223 2.55
Total interest-bearing liabilities 3,020,505 5,071 0.68 2,852,414 4,916 0.69
Noninterest-bearing demand deposits 1,082,762 1,023,042
Other liabilities 39,689 46,274
Stockholders' equity 521,387 516,940
Total liabilities and stockholders' equity $ 4,664,343 $4,438,670
Net interest income and spread $ 38,372 3.29 % $ 35,522 3.20%
Less: tax-equivalent adjustment 1,640 1,589
Net interest income $ 36,732 $ 33,933
Interest income/earning assets 3.97 % 3.89%
Interest expense/earning assets 0.46 0.47
Net interest margin 3.51 % 3.42%
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2016 and 2015. The annualized taxable-equivalent adjustments utilized in
the above table to compute yields aggregated to $1.6 million and $1.6 million in 2016 and 2015, respectively.
(2) Non-accrual loans are included in the average balances.
(3) Includes only investments that are exempt from federal taxes.

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED
Six Months Ended June 30,
2016 2015
Annualized Annualized
Average (1) Average Average (1) Average
(Dollars in thousands and tax-equivalent) Balances Interest Yield/Rate Balances Interest Yield/Rate
Assets
Residential mortgage loans $ 809,574 $ 13,802 3.41%$729,343 $ 12,279 3.37%
Residential construction loans 138,781 2,463 3.57 134,849 2,489 3.72
Total mortgage loans 948,355 16,265 3.43 864,192 14,768 3.42
Commercial ADC loans 266,888 6,113 4.61 212,257 4,862 4.62
Commercial investor real estate loans 769,803 17,600 4.60 657,088 15,350 4.71
Commercial owner occupied real estate loans 681,347 16,365 4.83 618,100 15,200 4.96
Commercial business loans 457,181 9,956 4.38 390,853 8,507 4.39
Leasing - - - 36 1 3.76
Total commercial loans and leases 2,175,219 50,034 4.63 1,878,334 43,920 4.72
Consumer loans 450,335 7,774 3.49 429,746 7,106 3.35
Total loans and leases (2) 3,573,909 74,073 4.16 3,172,272 65,794 4.18
Loans held for sale 11,181 198 3.54 10,583 208 3.94
Taxable securities 490,338 6,356 2.59 617,861 7,722 2.50
Tax-exempt securities (3) 284,524 6,024 4.23 294,024 6,305 4.29
Total investment securities 774,862 12,380 3.20 911,885 14,027 3.08
Interest-bearing deposits with banks 42,777 107 0.50 35,273 44 0.25
Federal funds sold 608 2 0.48 473 1 0.22
Total interest-earning assets 4,403,337 86,760 3.96 4,130,486 80,074 3.90
Less: allowance for loan and lease losses (41,567) (37,833)
Cash and due from banks 46,783 46,663
Premises and equipment, net 53,396 51,127
Other assets 212,915 215,567
Total assets $ 4,674,864 $4,406,010
Liabilities and Stockholders' Equity
Interest-bearing demand deposits $ 577,771 223 0.08% $525,692 207 0.08%
Regular savings deposits 294,339 89 0.06 274,220 71 0.05
Money market savings deposits 902,352 932 0.21 832,549 590 0.14
Time deposits 538,435 2,634 0.98 455,147 1,693 0.75
Total interest-bearing deposits 2,312,897 3,878 0.34 2,087,608 2,561 0.25
Other borrowings 116,792 138 0.24 98,228 110 0.23
Advances from FHLB 599,423 6,113 2.05 614,254 6,502 2.13
Subordinated debentures 32,995 473 2.87 35,000 442 2.53
Total interest-bearing liabilities 3,062,107 10,602 0.70 2,835,090 9,615 0.68
Noninterest-bearing demand deposits 1,052,116 1,004,965
Other liabilities 37,793 46,824
Stockholders' equity 522,848 519,131
Total liabilities and stockholders' equity $ 4,674,864 $4,406,010
Net interest income and spread $ 76,158 3.26 % $ 70,459 3.22%
Less: tax-equivalent adjustment 3,304 3,153
Net interest income $ 72,854 $ 67,306
Interest income/earning assets 3.96 % 3.90%
Interest expense/earning assets 0.49 0.47
Net interest margin 3.47 % 3.43%
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2016 and 2015. The annualized taxable-equivalent adjustments utilized in
the above table to compute yields aggregated to $3.3 million and $3.2 million in 2016 and 2015, respectively.
(2) Non-accrual loans are included in the average balances.
(3) Includes only investments that are exempt from federal taxes.

For additional information or questions, please contact: Daniel J. Schrider, President & Chief Executive Officer, or Philip J. Mantua, E.V.P. & Chief Financial Officer Sandy Spring Bancorp 17801 Georgia Avenue Olney, Maryland 20832 1-800-399-5919 Email: DSchrider@sandyspringbank.com PMantua@sandyspringbank.com Web site: www.sandyspringbank.com

Source:Sandy Spring Bancorp, Inc.